Buy Dec 2018 TP (IDR) 4,770 Consensus Price (IDR) 4,002 TP to Consensus Price +19.2% vs. Last Price +61.1%

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1 Pembangunan Perumahan Tbk (PTPP) Optimism Beyond Expectation Consistent and Stellar Growth in New Contracts Compared to other State-Owned Enterprises (SOEs) construction, PTPP s new contract growth figures of 20%-30% since 2015 turned into the most stable growth. In 11M17, it succeeded to register new contracts amounting to IDR37.6 trillion, a short fall than the estimated new contract of IDR40 trillion. We project likely ramping up figures so that it will likely register growth topping 23%. The consistent double-digit growth in new contract was attributable by its diversified-based contracts standing in contrast to ADHI and WIKA giant projects-based contracts, namely light rail transit (LRT) and high speed railway (HSR). Meanwhile, toll roads-based contracts are WSKT s main focus. Margin Booster From Property The increment in revenue portion contributed by the property and investment division is a takeaways factor for hedging risk looming from new construction contracts exposed to any impediment. Additionally, its profitability will be more buoyant as this division has the gross margin running closely to 40%-60%, topping the construction and EPC division registering the gross margin settling at 10%-20% Target Price of IDR4,770 We use an estimate of forward P/E of 11.3 (1SD lower than the last 5 years average of 17.3x) as our basis of valuation method for obtaining the target price of December The target price implies a 2018E P/E of 13.8x. Now, PTPP is traded at a 2017/E P/E of 8.6x. Pembangunan Perumahan, Tbk Summary (IDR bn) 2016/12A 2017/12E 2018/12E 2019/12E Revenue 16,459 20,401 24,477 29,452 Revenue growth 15.8% 23.9% 20.0% 20.3% EBITDA 2,002 3,053 5,083 6,906 Net profit 1,023 1,251 1,598 1,937 EPS (IDR) EPS growth 38.3% 22.2% 27.8% 21.2% BVPS (IDR) 1,741 2,064 2,430 2,841 EBITDA margin 12.2% 15.0% 20.8% 23.4% Net Profit Margin 6.2% 6.1% 6.5% 6.6% ROE 12.8% 10.6% 11.5% 11.9% ROA 4.1% 3.6% 3.9% 4.2% ROIC 10.3% 8.6% 9.5% 9.9% P/E 23.1x 13.6x 10.7x 10.7x P/BV 2.2x 1.3x 1.1x 1.0x EV/EBITDA 10.4x 5.6x 3.8x 3.0x DPS (IDR) Dividend yield 1.3% 2.2% 2.8% 3.4% Source: Company Data, Bloomberg, NHKS Research Please consider the rating criteria & important disclaimer NH Korindo Sekuritas Indonesia Company Report Buy Dec 2018 TP (IDR) 4,770 Consensus Price (IDR) 4,002 TP to Consensus Price +19.2% vs. Last Price +61.1% Shares data Last Price (IDR) 2,960 Price date as of Jan 19, wk range (Hi/Lo) 3,810 / 2,250 Free float (%) 48.9 Outstanding sh.(mn) 6,200 Market Cap (IDR bn) 18,104 Market Cap (USD mn) 1,356 Avg. Trd Vol - 3M (mn) Avg. Trd Val - 3M (bn) Foreign Ownership 20.6% Property Construction Bloomberg Reuters Raphon Prima , ext:214 raphon@nhsec.co.id Share Price Performance PTPP IJ PTPP.JK YTD 1M 3M 12M Abs. Ret % 0.4% -8.7% -28.2% Rel. Ret % -0.4% -11.0% -45.8%

2 Performance Highlights New Contract (IDR bn) FY FY 2019E Buoyant Property Portion PTPP succeeded to ramp up the revenue contributed by the property and investment division from 5% in 2014 into 13% in We project that the buoyant revenue portion was propped up by its subsidiary in property sector, PPRO, marking aggressive performance. Another to its aggressive subsidiary s performance, its successful cooperation with PT Kereta Api Indonesia in developing transit orienteddevelopment (TOD) based vertical residences in major stations in Jakarta is also a potent driver for the buoyant property portion. PTPP s Stellar Target PTPP has set a 2018 stellar revenue target hitting IDR28 trillion, topping our prior target projection. This 2018 revenue target trillion is higher than revenue target amounting to IDR24.5 trillion we initially estimated. Meanwhile, the net profit targeted amounts to IDR2.1 trillion (vs the net profit amounting to IDR1.6 trillion we project). The confidence in a stellar target achievement is justified by the par excellence 2017 performance achieving net profit of IDR1.7 trillion, growing by 66.1% y-y than was 2016 net profit growth of IDR1.0 trillion net profit growth was higher than the net profit amounting to IDR1.3 trillion we initially estimated and topped the average growth of 35% achieved since Revenue (IDR bn) FY FY 2019E Revenue Breakdown FY 2017E Property & Investment Revenue (IDR bn) FY FY 2019E PT NH Korindo Sekuritas Indonesia Company Research Page 22

3 Gross Margin FY FY 2019E Net Profit (IDR bn) FY FY 2019E Construction Revenue (IDR bn) FY FY 2019E EPC Revenue (IDR bn) FY FY 2019E Margin Ratios FY FY 2019E Total Debt (IDR bn) FY FY 2019E PT NH Korindo Sekuritas Indonesia Company Research Page 33

4 Multiple Valuation Forward P/E band Last 5 years Dynamic Forward P/E band Last 5 years Rating and target price update Target Price Revision Date Rating Target Price Last Price Consensus vs Last Price vs Consensus 04/13/2017 Buy 4,960 (Dec 2017) 3,380 4, % +2.4% 09/01/2017 Buy 4,060 (Dec 2018) 2,770 4, % -7.2% 11/15/2017 Buy 4,770 (Dec 2018) 2,750 4, % +15.5% 1/23/2018 Buy 4,770 (Dec 2018) 2,960 4, % +19.2%, Bloomberg Analyst Coverage Rating Closing and Target Price Source: Bloomberg NH Korindo Sekuritas Indonesia (NHKS) stock ratings 1. Period: End of year target price 2. Rating system based on a stock s absolute return from the date of publication Buy : Greater than +15% Hold : -15% to +15% Sell : Less than -15% PT NH Korindo Sekuritas Indonesia Company Research Page 44

5 Summary of Financials PTPP Summary Last Price (IDR) January 19, ,960 Target Price (IDR) Dec , /12A 2017/12E 2018/12E 2019/12E Analyst: Raphon Prima Rating: Buy ROE 12.8% 14.6% 14.7% 14.9% ROA 4.1% 4.9% 5.0% 5.3% INCOME STATEMENT ROIC 10.3% 10.4% 10.6% 12.0% EBITDA/Equity 25.1% 25.3% 31.4% 33.6% In IDR bn 2016/12A 2017/12E 2018/12E 2019/12E EBITDA/Assets 7.9% 8.5% 10.6% 11.9% Revenue 16,459 22,423 27,565 32,967 Cash Dividend (IDR bn) Growth (% y/y) 15.8% 36.2% 22.9% 19.6% Dividend Yield (%) 1.3% 2.9% 3.5% 4.3% Cost of Revenue (14,003) (19,036) (23,220) (27,114) Payout Ratio (%) 30% 30% 30% 30% Gross Profit 2,456 3,387 4,345 5,853 DER 53% 59% 58% 58% Gross Margin 14.9% 15.1% 15.8% 17.8% Net Gearing 161% 156% 140% 129% Operating Expenses (556) (662) (823) (1,039) LT Debt to Equity 29% 31% 31% 30% EBIT 1,899 2,725 3,521 4,814 Capitalization Ratio 35% 37% 37% 37% EBIT Margin 11.5% 12.2% 12.8% 14.6% Equity Ratio 35% 33% 35% 36% Depreciation ,068 1,062 Debt Ratio 18% 19% 20% 21% EBITDA 2,002 3,054 4,589 5,876 Financial Leverage 316% 297% 295% 283% EBITDA Margin 12.2% 13.6% 16.6% 17.8% Current Ratio 153% 133% 124% 114% Interest Expenses (409) (342) (467) (929) Quick Ratio 89% 76% 64% 58% EBT 1,704 2,747 3,457 4,279 Cash Ratio 59% 43% 35% 26% Income Tax (552) (771) (1,046) (1,338) Cash Conversion Cycle (76.9) (60.7) (65.4) (69.1) Minority Interest (128) (215) (265) (334) Par Value (IDR) Net Profit 1,023 1,761 2,146 2,607 Total Shares (mn) 6,200 6,200 6,200 6,200 Growth (% y/y) 38.3% 72.1% 21.9% 21.5% Share Price (IDR) 3,810 2,960 2,960 2,960 Net Profit Margin 6.2% 7.9% 7.8% 7.9% Market Cap (IDR tn) BALANCE SHEET In IDR bn 2016/12A 2017/12E 2018/12E 2019/12E 2016/12A 2017/12E 2018/12E 2019/12E Cash 9,424 8,882 8,134 6,723 Price /Earnings 23.1x 10.4x 8.6x 8.6x Receivables 4,776 6,870 6,739 8,498 Price /Book Value 2.2x 1.4x 1.1x 1.0x Inventories 2,656 4,357 4,194 6,071 Price/Revenue 1.4x 0.8x 0.7x 0.6x Total Current Assets 24,344 27,519 28,812 29,697 PE/EPS Growth 0.6x 0.1x 0.4x 0.4x Net Fixed Assets 5,527 11,035 15,815 21,746 EV/EBITDA 10.4x 6.3x 4.9x 4.6x Other Non Current Assets 1,362 1,679 1,521 1,263 EV/EBIT 11.0x 7.1x 6.4x 5.6x Total Assets 31,233 40,233 46,147 52,706 EV (IDR bn) 20,916 19,338 22,659 26,922 Payables 10,237 12,994 15,344 17,717 Revenue CAGR (3-Yr) 12.2% 21.7% 24.7% 26.1% ST Debt 2,635 3,649 4,315 5,312 EPS CAGR (3-Yr) 34.5% 48.9% 42.6% 36.6% Other Current Liab. 3,006 3,974 3,490 3,127 Basic EPS (IDR) LT Debt 3,083 4,144 4,974 5,754 Diluted EPS (IDR) Other Non Current Liab. 1,475 2,168 2,054 1,774 BVPS (IDR) 1,741 2,146 2,576 3,068 Total Liabilities 20,437 26,930 30,178 33,684 Revenue PS (IDR) 2,655 3,617 4,446 5,317 Shareholders' Equity 10,796 13,304 15,970 19,023 DPS (IDR) CASH FLOW STATEMENT DCF, RIM & EVA In IDR bn 2016/12A 2017/12E 2018/12E 2019/12E 2016/12A 2017/12E 2018/12E 2019/12E Net Income 1,023 1,761 2,146 2,607 DCF (IDR bn) Deprec & Amortization ,068 1,062 NOPAT 1,284 1,960 2,456 3,309 Chg. In Working Capital (81) 2,066 (175) (286) +Depr./Amor ,068 1,062 CFO 1,045 4,155 3,039 3,383 -CAPEX (1,052) (4,879) (5,848) (6,994) Capex (1,052) (4,879) (5,848) (6,994) -Incr. (Decr.) in Working Cap. (81) 2,066 (175) (286) CFI (1,867) (5,500) (5,804) (7,015) (Unlevered) FCFF 253 (525) (2,499) (2,909) Dividends Paid (177) (377) (528) (644) WACC Net Borrowing (PMT) 3, ,497 1,776 Cost of Debt (Tax Adj.) 7.0% 5.6% 6.0% 6.4% CFF 6, ,017 2,221 Cost of Equity (COE) 9.5% 12.5% 13.1% 13.6% Net Changes in Cash 6,117 (541) (748) (1,411) WACC (%) 9.0% 10.4% 10.7% 10.9% RIM OWNERSHIP PROFITABILITY & STABILITY VALUATION INDEX Spread (FROE-COE) (%) 10.4% 3.8% 3.0% 2.8% Residual Income (IDR bn) By Geography % Shareholders % Equity Charge (IDR bn) 489 1,350 1,745 2,164 Indonesia 79.4 Republic of Indonesia 51.0 EVA United States 5.8 Norges Bank 2.9 Invested Capital (IDR bn) 8,388 16,515 21,097 25,260 Norway 4.4 Vanguard Group 1.3 ROIC-WACC (%) 6.3% 1.4% 0.9% 2.2% Luxembourg 3.0 Dimensional Fund 1.2 EVA (IDR bn) DISCLAIMER This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom. All rights reserved by PT NH Korindo Securities Indonesia PT NH Korindo Sekuritas Indonesia Company Research Page 55